Securities which are acquired from the issuer or an affiliate in a "transaction or chain of transactions not involving any public offering," are also deemed restricted securities for purposes of Rule 144, whether or not they bear a restrictive legend.
Thus if a director (an affiliate) of General Electric buys G.E. stock in the open market, that stock is deemed not to be restricted, because it was acquired in a "public" transaction. Even so, the director would have to comply with Rule 144 to sell the stock on the open market to avoid underwriter status simply because he is an affiliate. If the director instead sells the stock in a private sale to a non-affiliate, the stock becomes restricted in the hands of the buyer, because he has purchased from an affiliate in a transaction not involving any public offering. The buyer would have to comply with Rule 144 in order to resell the stock on the open market without registration.
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